Unemployment Rate Increases for the First Time in Four Months

According to the Department of Statistics Malaysia (DOSM), the country's unemployment rate increased to 4.8% in June 2021, after four consecutive months of decline. Based on its Labour Force Survey, there are 758,700 unemployed persons in Malaysia. 

For comparison, Malaysia recorded an unemployment rate of 4.5% in May. Chief statistician Datuk Seri Dr Mohd Uzir Mahidin stated the labour force situation in June was tough as Malaysia maintained its endeavour to flatten the curve of Covid-19 cases.

According to him, the increase of new daily cases has caused the implementation of the Full Movement Control Order (MCO) during the month, whereby only essential services and economic sectors were allowed to operate. The government allowed business activities related to 

• Food & beverages, 

• Utilities, 

• Health & medical care, 

• Security, 

• Transportation, 

• Communications, 

• Banking and 

• Essential construction activities. 

He added that the government also allowed small businesses such as food or beverage stalls and hawkers to operate.  

Continuing decline

In June 2021, the number of employed persons decreased by 0.5% to 15.3 million persons. There were 15.37 million employed persons in May 2021, with the employment-to-population ratio dropping by 0.4% to 65%.

However, the year-on-year's unemployment rate was slightly lower than the 4.9% reported in June 2020.

According to DOSM, the inactivity in the labour force in that month also translated to a lower labour force with 16.07 million persons, versus 16.1 million persons in May 2020, the first decline of labour force recorded since April 2020 when the pandemic hit Malaysia. 

Consequently, the labour force participation was lower at 68.3%, compared to 68.5% in the previous month. 

All sectors recorded declines in employment, as the services sector posted its first decline in a year. 

Principal statistics of labour force in Q2 2020, Q1 2021, and Q2 2021.

Further decrease in Q2 2021

As a result of the Full MCO, the number of employed persons who were temporarily not working rose significantly to 801,100, an increase of 661,400 month-on-month. DOSM said it observed a similar situation during the first implementation of MCO last year.

Assessing the overall second quarter, Dr Mohd Uzir stated the labour force decreased by 36,100 persons to 15.97 million persons amid drops in employed and unemployed persons. 

He said that during the quarter, the number of employed persons dropped by 0.2% to 15.21 million persons, mainly in these sectors:

• Services,

• Agriculture, and

• Mining & quarrying.

He also said that DOSM recorded the unemployment rate of the second quarter at 4.8%, with 764,900 unemployed persons. The labour force participation rate in Q2 stood at 68.3%.

The highest unemployment rate by state in Q2 was:

• Labuan at 8.8%,

• Sabah at 8.7%, 

• Perlis at 5.3%, 

• Kelantan at 4.8%, and 

• Selangor at 4.4%.

For more information, you can read DOSM's report here.

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